RIYADH, 30 March 2005 — Saudi Arabia and India are considering a proposal to set up an oil refinery in India as part of a joint initiative to boost their bilateral relations in the energy sector. This was a major outcome of a meeting yesterday between Minister of Petroleum and Mineral Resources Ali Al-Naimi and his Indian counterpart Mani Shankar Aiyar aimed at boosting trade and investment opportunities in the oil, gas and mineral sectors.
The new joint venture will import crude oil from the Kingdom and supply refined products to India’s burgeoning market in the oil and gas sector. New Delhi and Riyadh have shown keen interest in boosting cooperation in the oil sector. Companies such as HPCL are looking at partnering with Saudi Aramco and setting up refineries in both Saudi Arabia and India. The two companies are also exploring joint marketing activities in India.
India has many joint ventures with the Kingdom, including those in the petrochemical sector. The latest to come on stream this year will be Saudi-Indian Petrochemicals located in Yanbu. It has an installed production capacity of 100,000 tons of regular paraffin and 800,000 tons of alkyl benzene annually.
Following their meeting, Al-Naimi highlighted existing Saudi-Indian relations and hoped that they would be further enhanced in the next few years. The Saudi minister said India is the fourth biggest petroleum consuming countries in Asia, adding that India’s demand for oil would increase in future. Currently, that country imports 60 percent of its petroleum requirements, or about 430,000 barrels per day, from the Kingdom.
“We are ready to increase our oil exports to India,” Al-Naimi said. He pointed out that he had reviewed with his Indian counterpart issues relating to joint investments in the fields of petroleum and mining and added: “The Kingdom is keen on investing in India through implementing joint projects of petroleum refineries and distribution of petroleum products.”
Spelling out his future vision, Aiyar, the first Indian petroleum minister to visit the Kingdom, said that the Indo-Saudi ties would touch a new high in the coming days when Crown Prince Abdullah comes on a visit to India, the dates of which are yet to be finalized. Saudi Arabia meets 26 percent of India’s crude petroleum requirements and the bulk of its petroleum products. The Kingdom is looking for investment opportunities as well. This will boost Saudi and Indian investments in both countries and bring stable market equilibrium, he said.
Referring to the oil contracts, the Indian minister said India was looking for long-term oil contracts with Saudi Arabia, for which modalities could be established.
Asked about plans to ensure long-term energy imports from Saudi Arabia, Aiyar said that “the total of India’s oil imports from Saudi Arabia will double soon”.